More U.S. workers shop for health care insurance

For some American workers, picking the right health insurance is becoming more like hunting for the perfect business suit: It takes some shopping around to find a good fit and avoid sticker shock.

In a major shift in employer-sponsored health insurance coverage, companies such as Sears Holdings Corp. and Darden Restaurants Inc. are giving employees a fixed amount of money and allowing them to choose their own coverage based on their individual needs.

The approach, called defined contribution health insurance, contrasts to the decades-old practice by most U.S. employers of offering workers a one-size-fits-all plan with benefits they may not want. It also means American workers who've grown accustomed to having their benefits chosen for them could wind up with bigger bills and inadequate coverage if they don't choose wisely.

"It's a big, big change in the nature of what it means to have health insurance," says David Cutler, a Harvard University economist.

Until now, defined contribution health insurance plans have been largely limited to small businesses and retirees. But more employers are considering them as a way to control their rising health care costs. After all, the average annual premium -- or cost for insurance coverage -- for an employer-sponsored family health plan has almost doubled in the past decade to nearly $16,000, according to the nonprofit Kaiser Family Foundation.

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And companies generally foot at least 70 percent of that bill.

The plans are catching on. Benefits consultant Mercer found 45 percent of the 2,809 employers it surveyed are using or are considering a defined contribution approach.

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